‘Free Market’ Double Standards 5.0

The imaginary ‘free market‘, itself a highly contradictory concept, and one that causes its proponents to ignore anything inconvenient to their worldview, has helpfully offered up another 23 examples of its followers either flat out contradicting themselves, or holding a clear double standard in two similar situations.

To clarify the first two: John Bates Clark originated the theory of marginal productivity, which holds that labourers are paid pretty much exactly what their labour is worth. Yet he also endorsed the notion that labour is worthless unless it was combined with capital, and that the division of labour allowed groups to produce more than they could individually. The latter two imply that you cannot separate a single labourer’s productivity from other factors.

1. The division of labour is an amazing phenomenon that allows groups of labourers to cooperate to produce more than they could if they worked alone. But each labourer has their own discernible marginal value product (which they are, obviously, paid because free market).

2. Labour has nothing without capital; that entrepreneurs combine their capital with labour justifies their profits and benefits both sides. But labour, on its own, has a discernible MVP (which…see above).

3. Reports of stagnant median incomes since the 70s are exaggerated. Simultaneously, stagnant median incomes since the 70s refute the broken link between growth and happiness.

5. We shouldn’t use crude indicators to look at monetary policy, only NGDP. Even though fiscal stimulus is functionally similar, we shouldn’t apply the same logic to it.

6. We were upgraded – proof that austerity works. We were downgraded – this is why we need more austerity.

7. Sin taxes don’t discourage addicts because they need the products that much. High taxes on the rich, however, will discourage them, despite the fact that they are the most driven and innovative individuals in society.

8. We emphasise choice and market diversity, but model the economy as a single person with set preferences who responds robotically to incentives, and as such does not have any real choice.

9. The market is a democracy, and each dollar is a vote. Inequality is not a problem.

10. If rich people felt they were getting a good deal from taxes, they’d pay them. But benefits cause people to free ride.

11. Keyneshated jews, and was evil – this is an argument against his economics. Hayek is better.

19. We must look at how economic systems and decisions affect all groups of people and across time, rather than just one and at the time it is implemented. But we adopt a Anglo-centric perspective on capitalism, ignoring its global impact.

20. The ‘Golden Age’ of Keynesian economics inevitably resulted in the stagflation of the 1970s. The crisis of 2008 was unrelated to the economic paradigm of the past few decades.

I have concerns about a lot of these that I talk about on my blog. Many of them aren’t “double standards” at all because you’re quoting two completely different people. But I guess what bothered me the most was what you wrote about Arrow-Debreu.

There is no one consumer with one set of preferences. There are, in fact, “i” consumers each with their own idiosyncratic, perverted, quaint, or boring set of preferences (Arrow-Debreu, 1954, pg. 269). “i” can be more than one if you want it to be. “i” can be 10,000,000,000, thus exceeding the number of consumers currently living on the planet, if you want it to be. The only constraints on the preferences are that they be complete, transitive, and continuous. That doesn’t seem like too much to ask to me. “Complete” is the really suspect one, but I think “locally complete” should be enough to appreciate the point of the model. Even given that particular nit that you may be interested in picking, it hardly seems like a “double standard” to me. It strikes me as being more along the lines of Nobel Prize material (and I am not alone in this assessment. The Nobel Prize committee, for one, seems to agree with me). The last line is pretty dumb too… how are you “robotically responding” if you follow your preferences??? Isn’t that the opposite of responding robotically? Don’t we usually reserve the word “robotic” to describe people who respond to some predetermined protocol regardless of their preferences? Don’t we reserve the word “robotic” for people who don’t even appear to have preferences of their own? Isn’t Arrow-Debreu exactly the opposite of this?

The link to Arrow Debreu is a mistake and has been fixed – I was referring to representative agents.

I think there is a tension between the idea of people being free to choose and also responding to incentives in such a way that their actions are entirely predictable and controllable. I didn’t communicate it well in the post above, however.

Sin taxes v. taxes on the rich? You must be kidding. Do you really think the demand of the rich for investment and risk is as strong as that of a smoker or boozer for their fix? When rich folk see that the taxes on new deals and projects are high, they drop the deal or project because there is no pressure on them to do the deal or project. They are rich, remember? They say to hell with it and go to Hawaii, or their country estate or just loaf about.

I’m comfortable, I’m Canadian, we did not suffer too much in the recent recessions, we have money so we are constantly being touted depressed American real estate. I can buy a 50 Unit apartment building in Arizona for $2.0M, needs $.5M of work, it’s already 80% full and has a good cap rate even at present occupancy levels. I won’t consider any such deal in the USA because I no longer trust American governments, at any level. My fear of regulatory uncertainty and high taxes exceed my desire for profit.

Sin taxes v. taxes on the rich? You must be kidding. Do you really think the demand of the rich for investment and risk is as strong as that of a smoker or boozer for their fix?

I’m referring to the juxtaposition of the idea that the rich are driven, innovative and hard working, and the idea that a 3% tax increase will stop them from doing anything. Personally I think the former is more true than the latter but to support both of them requires a glass of doublethink.

There are many important flaws in mainstream economics. But someone with an ideological axe to grind, like this fellow, isn’t going to get you a clear view of them! See, for instance, Kuehn’s quiote above on why #3 and #4 are misleading to the edge of dishonesty.

And #14 is about a bad a misunderstanding of Hayek’s point as I have ever seen.

#3: Tabarok lightly speculates on two talks he has heard. In one he says he has “no definitive answers.” In the other he mentions what the guy said. I’m not even sure the talks contradict each other, but if they did, what does this show but that Tabarok *thinks* about different talks he hears?

#4: “But economists do appeal to both of them.” — So what? This is only a contradiction if the SAME economists appeal to both of them on the SAME issue you mention. Now show someone who does that.

#14: Hayek did NOT say that the fact knowledge is local and dispersed is “great for coordinating prices.” This is a severe misunderstanding of his point, which is that, GIVEN that social knowledge is local and dispersed, prices may be the best way to assemble it one place. You may disagree with that argument as well, but the point is you got the relationship completely backwards.

And what leads somewhat to so seriously strawman an opponents argument is almost ideology. So you see the connection? It’s not that you disagree with me, it’s that you posited specious “contradictions” in 3 and 4, and totally missed Hayek’s point in 14.

#4 I have a textbook that endorses Lucas’ critique of the Phillips curve and also makes a Friedman-esque argument about marginalist analysis for firms (e.g. ‘even though firms don’t actually consult marginal cost curves that doesn’t matter’).

#14 I think Hayek’s analysis was highly idealised and he should have thought about the problems local knowledge generates as well as those that it solves. One of these is fraud – he failed to explore and mention it.

It may be the case that Hayek ought to have thought more about fraud. I’m not arguing that point. It’s that the “local knowledge” analysis you have is reversed: Hayek didn’t say local knowledge is good because it generates good prices, he said, because so much knowledge is local, it’s a good thing we have prices!

I understand that the way I phrased it may have been misleading or poorly thought out, but I can assure you it was not dishonesty and I feel my point is still valid (as you seem to have partially agreed).

Straw man arguments, which may amuse your fan club, but since when e.g. did the concept of marginal productivity – it is not a theory – say that labourers get paid what their labour is worth? Incidentally it remains perfectly possible to a single labourer’s productivity if he/she is carrying out a task on his/her own – it is only when a team is involved in that stage of the production process that individual productivity cannot be measured. Or are you confusing measuring and valuing?

Having read through your points, it is clear you don’t understand half of what you write and very few of your points seem to have anything to do with free market economists or advocates. You know, Austrian economists and libertarians of the Ron Paul tradition. In most cases, your points seem completely made up and don’t make any sense. I don’t know what “economics” you think you have learnt and want to unlearn, but it is clear you understand little or nothing about economics. Below is a brief point-by-point response.

1. I don’t see how this point is a contradiction. Every worker is better at some things than he is at others. No one is equally skilled at everything. A shoemaker, for instance, is much more productive as a shoemaker than as a baker. What exactly is your problem here? Each worker’s productivity varies with the task he is given, his productivity is not a homogenous blob.

2. I don’t know who’s claimed that labor is nothing without capital. Labor is a factor of production. Capital can be any number of things, equipment for instance. A worker digging ditches will be much more productive if he has a shovel compared to having to dig with his bare hands.

3. Who is talking about the link between growth and happiness?

4. Free market economists don’t put much importance on predictions, it is the Keynesians who think economics is about predictions, and since Keynesians are anti-market I don’t understand how this point constitutes a free market double standard.

5. Free market economists usually advocate looking at many different things, both at the micro and the macro level. Who says that we should only look at NGDP?

6. Another empty point with no explanation how it relates to free market advocates. Austerity hasn’t been seen anywhere in the Western hemisphere for decades.

7. So now you are comparing addicts to people who are functionally free to make their own choices. An addict tends to prioritize his poison. If his poison is taxed more heavily, he will spend more of his disposable income on his poison and less on other things. This is the nature of his disease. A rich and successful person who is taxed more heavily with his success will have less incentive to create new sources of revenue, since the marginal value of those new sources of revenue is diminished.

8. Free market advocates don’t model the economy. Responding to incentives doesn’t mean we don’t choose. At any given time, we can only fulfill a small fraction of our desires. The incentives we are given influence the choices we make, i.e. which goals we choose to pursue.

9. Again a completely meaningless point, but I sense you are inferring that it is a problem that some people have more “votes” than others. There is no reason to think that, thus there is no contradiction.

11. Free market economists argue against Keynes’ economics because he was probably the worst economist in history after Karl Marx. His so called theories are so riddled with contradictions and logical fallacies that not even his disciples understood him. The fact that his sympathies lay with fascism is beside the point.

12. What bad things have happened under capitalism that was the cause of capitalism? And how was not Stalin’s and Mao’s socialism “true socialism”?

13. What does “crowding in” even mean?

14. Price coordination relies on the signals from market participants who each price given goods and services according to their preferences at any given time. That has nothing to do with fraud.

15. The thing is of course that unions are the loudest critics against high pay for company executives, which makes high pay for union bosses more than a tad hypocritical.

16. High profits means the company is satisfying consumer demand in an economically effective way. The higher the profits, the higher the efficiency which means that scarce resources are being used most responsibly. There is no contradiction here, just a complete misunderstanding on your part what profits actually mean.

17. Are now trying to claim that economies of scale don’t exist? In other words, you don’t think that one sawmill with 1,000 employees would produce more than 1,000 individual persons cutting trees.

18. Free market advocates generally oppose so called free trade agreements, since they usually are anything but free trade.

19. Who is ignoring the global impact of capitalism? Free market economists put much emphasis on history and global trends.

20. Free market economists have emphasized the link between the 2008 crash with bursting of the dot.com bubble and the economic policies of the 1980s and 1990s. Again, you’re simply lying.

21. The high wage rates have very little to do with market mechanisms and very much to do with government interference through minimum wage laws, mandatory benefits, rigid labor laws, artificial powers to unions etc. No free market economist advocates government intervention to “erode high wages”, only that government should cease intervening in the labor market.

22. Free market economists have been very vocal in their criticisms against the modern banking system and its actors.

23. Capitalists don’t seek any such thing. Capitalist are people who support the capitalist economic system, nothing more.

Logic does not seem to have featured in your uneconomics course.
Marginal can be observed in hunter-gatherer societies (the only truly non-capitalist variant) but the elementary example of diminishing returns is when the amount of every input except one is held constant and one is varied. In the real world the marginal productivity of labour is daily measured when an extra individual is hired by a firm working below capacity or one individual leaves.

If you are hiring a replacement labourer to use an idle machine then no additional capital is required. And marginal productivity is that of an increase in one factor of production without *changing* any of the others not *without* any of the others
@ Ollie J
Do you really think that the foreman doesn’t make a note of how much the new recruit produces?

Firstly, in a hunter-gatherer society there is no capital associated with labour productivity. Secondly, marginal product is *not* marginal productivity. Or are you abolishing partial differential equations now?

Sure, there are some far off cases where a guy just goes out and picks berries or something, but the overwhelming majority of the time capital is combined with labour to produce something, particularly under capitalism (which is what we are studying, not hunter-gatherer societies).

I’m not ‘abolishing partial differential equations’ by saying that they are not useful in a particular circumstance.

Partial differential equations are how any normal person measures marginal productivity (even though most of them don’t know what the phrase means).
Incidentally, there were hunter-gatherer societies before the spear was invented

We are talking about marginal productivity of labour. If your capital stock is fully employed and you use a partial differential equation to calculate the effect of increasing your labour you will get a mathematically elegant but functionally meaningless answer.

These models assume, effectively, that if you have 9 people digging a hole and add a 10th, the spades of the first 9 will break down into slightly smaller spades. In reality, capital cannot be treated as homogeneous, liquid and separate from labour in this way.

You have provided hunter gatherer examples which we could debate, but I will consider irrelevant since we are talking about capitalist firms.

You also provided an example of where capital is not fully employed. If there is spare capital then you are not increasing production by just one labourer but by one ‘unit’ of capital of one ‘unit’ of labour at the same time.

Yes, John, the foreman makes a note, especially if the worker is getting paid according to a individual piece-rate.The calculations of piece-rates I am familiar with are the results of complex calculations, bargaining, supply and demand, status and inertia. It is usually quite far from a direct effect of marginal productivity.

The foreman makes a note if the new worker is on an hourly rate because if if it becomes clear during his/her probationary period that he/she is incompetent or a slacker he/she never gets taken onto permanent staff. For companies that do not follow this practice there is a condition called “insolvency”

Olle J
There is also a missing chain, not just link, between my saying the foreman will check on a new recruit and ascribing a wages policy for the firm linked to marginal productivity. The firm will set wages policy either on what it can get away with or what it needs to pay to attract high-quality staff – you would have to make a whole raft of assumptions to equate that to marginal productivity.
Piece-rates are actually quite rare in the UK outside the self-employed and casual labour sectors. Trade Unions expended great efforts to eliminate piece rates in the engineering industries in the 50, 60s and 70s and succeeded. In the 1950s Britain was the second largest car manufacturer in the world after the USA, and built the best cars (in tiny numbers) and motorcycles (in moderate numbers) in the world, was a (not necessarily the) world leader in aircraft, shipbuilding, railways, bridges, bicycles, stainless steel ….
Now – people automatically think “German” for quality engineering. The UK’s world-leading sectors are the ones with the highest level of self-employment – pop music and financial services.

“11. Free market economists argue against Keynes’ economics because he was probably the worst economist in history after Karl Marx. His so called theories are so riddled with contradictions and logical fallacies that not even his disciples understood him. The fact that his sympathies lay with fascism is beside the point. “i

The assertion that Keynes’s “sympathies lay with fascism” is either indicative of gross ignorance or a deliberative lie:

In contrast, we need look no further than Ludwig von Mises for sickening apologetics for Mussolini’s fascism:

“It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history. But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error” (Mises, L. von, 1978. Liberalism: A Socio-Economic Exposition (2nd edn; trans. R. Raico), Sheed Andrews and McMeel, Mission, Kansas. p. 51).

It that’s not enough later Mises became an economic adviser to the Austrian fascist Engelbert Dollfuss, even a close adviser (Hans-Hermann Hoppe, “The Meaning of the Mises Papers,” Mises.org, April 1997).

The cited paragraph from Mises’ “Liberalism” simply means that fascism, to some extent, shielded the European civilization from the depradations of Bolshevik Communism, which was even worse in Mises’ eyes. The book was written in 1927, long before anyone even knew of Hitler.

In addition to that, it is undeniably true that stated intentions of dictatorships are always benign, this is how they win power. Hitler didn’t rise to power by promising the Germans that he would oppress and massacre them. Neither did Mussolini or Franco, or even Lenin or Stalin for that matter.

All through the same book, Mises deplores the depradations of fascism, even on the same page as the one from which you’ve copypasted that quote. He himself was forced to flee Europe because of fascism and his house was raided by German and Austrian troops.

Contrast that to Keynes’ own foreword in the German edition of the General Theory.

There he states outright that his economic policies work better in an economy where the state has a larger role, it doesn’t fit laissez faire countries. And this can hardly be denied. Keynesian policies are enormously interventionist and protectionist, with large and powerful government institutions managing and regulating the economy. This is the fascist model which Keynes had the honesty to admit.

But this is, as said, typical Keynesianism. You deny what is black on white in Keynes own writings and which is obviously true from an objective, theoretical perspective. Keynesian policies require a strong, interventionist state. This is undeniable and Keynes himself states this. Fascism provides this platform, laissez faire does not.

Then you have the temerity to claim that Mises, of all the people in the world, is pro facism, when he spent his entire life, and almost DIED in the process, arguing against all types of collectivism, be it socialism, fascism or whatever else. For this he was shunned in America too, though he was not killed as he would have been in Nazi Germany or Austria, or Communist Eastern Europe. He could have adopted the statist, Keynesian persuation and thus gained entry to the finest halls of academia, but he remained true to his principles and abhorrance of state violence and interventionism.

Of all the rock bottom hits by Keynesians, of which there are an endless list, this may be the lowest of the low and more than anything else illustrate the thoroughly dishonest character of the average Keynesian. You really should be ahsamed of yourself.

(1) so you don’t deny Mises engaged in the most vile praise of fascism in this passage.

(2) nor do you even mention Mises’s support of the Austro-fascist Engelbert Dollfuss.

(3) “There he states outright that his economic policies work better in an economy where the state has a larger role, it doesn’t fit laissez faire countries. And this can hardly be denied. Keynesian policies are enormously interventionist and protectionist, with large and powerful government institutions managing and regulating the economy. This is the fascist model which Keynes had the honesty to admit.”

False. (1) fascism is not the same thing as (2) a government with macroeconomic interventions. You, and contemptible people like you, rob the word fascism of meaning, failing to take account of the authoritarian, militaristic nature of fascism and its history of war crimes. Calling for macroeconomic interventions to stabilise an economy is in no sense calling for fascism.

The usual nonsensical charge relies on suppressing the words: “Although I have, after all, worked it out with a view to the conditions prevailing in the Anglo-Saxon countries where a large degree of laissez-faire still prevails, nevertheless it remains applicable to situations in which state management is more pronounced.”

(5) “Then you have the temerity to claim that Mises, of all the people in the world, is pro facism, “

Straw man. I say he praised Mussolini’s fascism in this passage in this most disgrace, stupid and naive remarks.

(6) “For this he was shunned in America too, though he was not killed as he would have been in Nazi Germany or Austria, or Communist Eastern Europe.”

Which completely undermines your absurd attempt earlier to conflate states with Keynesian economics with fascism.

Mises didn’t praise fascism, he spent his life arguing against it. To claim otherwise is bald-faced lie about a man who almost died because of fascism. But that is as we all now the MO of the typical Keynesian.

Fascism is the marriage of big business and big government, Mussolini himself said that. Keynesian policies can only be implemented through a strong central state, as Keynes himself noted. And there is nothing more Keynesian than the central bank and the banking industrial complex.

“Straw man. I say he praised Mussolini’s fascism in this passage in this most disgrace, stupid and naive remarks.”

You clearly haven’t read the book, only that ripped out quote which shows the dishonesty of your character. One of Communism’s stated goals was to eradicate the Western cultural heritage or, as Mises put it, the European civilization. This was one of their main objectives. It is an undeniable fact that fascism was the first and greatest opponent to communism, evidenced by both Mussolini and Hitler. And Mises was proven right. Very little of the ancient European culture survived in Eastern Europe after it fell to Communism. So he didn’t praise Mussolini, he stated an objective fact. This you would know had you read the book and some European history, but of course you haven’t. Keynesians generally don’t do that.

How exactly? Keynesian policies need a strong central state, this Keynes himself said. This strong central state does not necessarily have to be as violent as Hitler’s Germany, FDR’s totalitarian rule works well too. There is no undermining here, quite the reverse. But as a Keynesian, you can’t help yourself but have to resort to distortion and lies.

Kaj, I was curious about this, so I *researched* it, not actually having an opinion on who was correct. I went to the NY Times archives, and searched for stories on “Adolf Hitler,” sorted by oldest first. It turns out that York is mostly correct here, I think: Hitler starts appearing in the NY Times by 1923, and is in the headlines by 1924. Both the fact he wrote a book in jail and his release were featured in headlines. So Mises, a keen student of current events and living in the next country over, certainly would have known of the man.

Of course, no one understand how important he would become at that time, so we really wouldn’t expect Mises to focus too much on him.

“Long before anyone had heard of Hitler”? Ahistorical nonsense. By 1927 he’d staged a paramilitary coup aiming at seizing control of the state by force, failed, gone through a sensational trial, gone to jail, written Mein Kampf, come out of jail, and rebuilt the party organisation on the Strasser plan while pursuing a policy of trying to make it more acceptable to the bourgeoisie. Everyone in Germany, at least, knew who he was, even if they expected him to remain the chieftain of a weirdo extremist cult.

The book was published in 1927, which means it was written earlier than that. In the mid-20s, Hitler was a pretty unknown person in the rest of the world. There were far more impressive people in the world at the time.

I could fisk your list in turn and we could have some back and forth. but generally it seems you have not followed the links and do not understand the arguments I am highlighting.

For example in 9, you feel that if a dollar is a vote and more people have more money, they do not have more votes. This is simply a denial of logic.

And in 10, you obviously haven’t read the (ridiculous) argument Worstall makes. He says that rich people would pay their taxes if they ‘felt like they were getting a good deal’, ignoring the fact that obviously they will free ride by the same logic he applies to benefit claimants and other market participants.

you seem to be confused as to who actually are free market advocates and who are not. Neo-classicists, monetarists and mainstream economists aren’t pro free market. Outside the Austrian School, very few economists actually favor free markets.

I actually do understand your arguments, what I’m saying is that they are wrong and/or inapplicable. No free market advocate supports the banking system of today, for example, or any bailouts. I can’t find a single free market advocate who have said the things you claim free market advocates are saying. As said, you don’t seem to know who are actually pro free markets and who aren’t. That is, I’m sad to say, very common. Most people even think that the US is a capitalist or largely capitalist economy, something it hasn’t been for 100 years, at least.

Regarding what you think I “feel” about point 9, I don’t have the faintest idea where you got that interpretation from. The comparison between the market and a democracy is a very high level analogy not to be taken literally. What I said was, quite clearly, was that it doesn’t matter that some people have more “votes” than others in the “market democracy”, i.e. they have more dollars. How you managed to misunderstand this is beyond me.

About point 10. Who cares what Tim Worstall says? He’s hardly a champion of the free market, let alone a free market economist. And the fact remains, the rich do pay taxes, they pay most taxes in fact. Obviously they would be more inclined to keep paying them instead of looking for ways to avoid them if they felt they got something back. Where exactly is the contradiction? To get something in return for what you pay is not to free ride. Free riding means getting something for nothing (or for much less). The poor, for instance, who pay little or nothing use public services much more than the rich. If public services and grants were given in proportion to taxes paid, the poor would get much less from the government and most rich people would get much more.

You are ‘No True Scotsman’-ing the free market, which is indicative of how subjective a concept it is. People purport to be in favour of it because they don’t see the hidden laws they ignore. Some go so far as to advocating abolishing the state altogether, whilst others insist a free market must have well defined property and contract laws. All accuse the others of not being the true apostles of the free market.

You can say ‘it doesn’t matter’ but that doesn’t make it true. Bowman simultaneously endorses the view of the market as democratic but doesn’t seem to care that that voting system is obviously skewed towards some. That is a double standard – if you want to appeal to the market as democratic, you must acknowledge the pitfalls of unequal voting. If you want to endorse inequality, you should find another way to support the market.

And in typical Keynesian fashion, you forfeit the debate and resort to meaningless ad hominems. How predictable you people are.

There are numerous examples of private property societies without the state, not to mention that there are century old justice systems outside the state that still operate today. Can you guess which?

Again, you really don’t seem to understand who is and who isn’t a free market advocate. You should familiarize yourself with the likes of Lew Rockwell, Stefan Molyneux, Peter Klein, Tom Woods, Robert Murphy…to name but a few.

Again, you’re taking the market-democracy analogy way too literally. It is not about equality, it is about making your own choices without forcing those choices upon others. It doesn’t make one bit of difference that some have more “votes” than others, because they can’t use these “votes” to force other people into doing what they don’t want to do, or deprive them of their property. You know, the things political democracy is all about.

(2) You cannot win a debate by shouting the name of a logical fallacy at your opponent

I’m aware of the existence of anarcho-capitalists. However, they are not the only ones who purport to be in favour of the free market. It is an incredibly subjective concept.

Actually, you’re incorrect about votes. Resources are ultimately scarce and so those with the most votes will skew production in favour of what they want – past a certain point, others have to deal with it. For example, imagine that one person has £100 and 10 others have £1. It is in every company’s interests to appeal to the one person’s, not the 10.

There is absolutely no contradiction in saying (1) Mises in other places and later in life opposed fascism and (2) in Liberalism: A Socio-Economic Exposition (2nd edn; 1978 [1927] trans. R. Raico) heaped the most vile praise on Mussolini’s fascism.

He wrote this in 1927, years and years after Mussolini took power in 1922 and used violence and coercion to maintain it.

Really, at his point, this is a demonstration to all reading this post of the illogic of apologists for Mises.

Here is Mises’s statement:

“So much for the domestic policy of Fascism. That its foreign policy, based as it is on the avowed principle of force in international relations, cannot fail to give rise to an endless series of wars that must destroy all of modern civilization requires no further discussion. To maintain and further raise our present level of economic development, peace among nations must be assured. But they cannot live together in peace if the basic tenet of the ideology by which they are governed is the belief that one’s own nation can secure its place in the community of nations by force alone.

It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history. But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error” (Mises 1978: 51). ”

It is only the most pig-headed liar or fool who will proclaim that he “didn’t praise fascism” here

Moreover, Mises’s praise of fascism as a “emergency makeshift” is totally consistent with his support for the Austro-fascist Dollfuss, admitted even by his biographer:

gcallah@May 21, 2012 – 11:22 pm

Come on, LK, everyone was praising Mussolini in the 20s and early 30s, most with much less reserve than Mises. Ghandi even praised him. It was a mistake, but there was nothing “vile” about it.

I suppose because “everyone was doing it” (which isn’t even true; e.g., the Italian economist Piero Sraffa opposed Mussolini, as did the victims of his tyranny and true supporters of democracy), that makes it alright!

And it takes a contemptible special pleading to ignore the fact that Mises isn’t just talking about Italian fascism here: he is certainly thinking of fascism as a general movement.

Mises opposed fascism and all forms of collectivism all his life. That kind of comes with being a classical liberal. The very fact that he wrote a book specifically praising liberalism (Liberalism) and a book specifically criticizing socialism (Socialism) should be a rather obvious clue.

This particular quote has been hashed and rehashed numerous times in numerous forums and they all end the same way. It was not a praise of fascism or Mussolini. All through the same book he criticizes Mussolini’s fascism as well as the fascism that was on the rise in Germany for its violence, nationalism and love for war. He basically predicted exactly what happened in Germany during the 1930s simply by extrapolating on the basic principles of fascism.

Again, the quote is no more than a statement of fact, that fascism succeeded, to some extent, in preventing the communist destruction of European civilization and cultural heritage (one of the communists’ stated goals). That is all it is. Nowhere and never has Mises praised fascism or any fascist, not in Liberalism or anywhere else. He had to flee Austria because of the beliefs he held and continued to hold for the rest of his life, to no small personal cost.

But it is of course pointless to rehash this obvious point with someone who calls himself Lord Keynes. Only a Keynesian can claim that the most prolific defender of classical liberalism, limted government, laissez faire, free markets and individual liberty of the 20th century has ever held anything but complete contempt for fascism.

Nevertheless, you might spend a little time contemplating the complete incompatibility of laissez faire and fascism. You can’t advocate laissez faire while praising fascism, which Mises of course never did. The very idea that one would praise fascism in a book called “Liberalism” is so absurd it can only occur to a Keynesian. On the other hand, Keynesianism is completely compatible with fascism and utterly incompatible with laissez faire. Keynes spent his life advocating big government and interventionism, he even wanted a world government. Mises spent his life arguing against. Taking into account what economic policies and philosophical principles are associated with Keynes and Mises, who is the actual fascist?

“I suppose because “everyone was doing it” (which isn’t even true; e.g., the Italian economist Piero Sraffa opposed Mussolini, as did the victims of his tyranny and true supporters of democracy), that makes it alright! ”

Come one again, LK: are you unfamiliar with idiomatic English? If I say, “Oh, just everyone is going to the Jay Z concert tonight,” of course I don’t mean there will be six billion people there!

And when I said “It was a mistake” what about that makes you believe that I think it was “alright”?

“And it takes a contemptible special pleading to ignore the fact that Mises isn’t just talking about Italian fascism here: he is certainly thinking of fascism as a general movement.”

Huh? Why is having guarded praise for fascism in general such much worse than having guarded praise for Italian fascism? (Especially since there were no other fascist nations in 1927?)

“From 1922 to 1925, Mussolini’s regime pursued a laissez-faire economic policy under the liberal finance minister Alberto De Stefani. De Stefani reduced taxes, regulations, and trade restrictions and allowed businesses to compete with one another. But his opposition to protectionism and business subsidies alienated some industrial leaders, and De Stefani was eventually forced to resign.”
Sheldon Richman, “Fascism,” Concise Encyclopedia of Economicshttp://www.econlib.org/library/Enc1/Fascism.html

(2) The Austro-fascism party of the Dollfuss and Schuschnigg regime in Austria – which Mises supported and even advised! – pursued deflationary, neoclassical policies to a considerable extent:

“In tackling the economic crisis the Dollfuss-Schuschnigg dictatorship pursued harsh deflationary policies designed to balance the budget and stabilize the currency. The government’s program featured severe spending cuts, high interest rates, and frozen wages. …:”

Bukey, Evan Burr. 2000. Hitler’s Austria: Popular Sentiment in the Nazi Era, 1938-1945, University of North Carolina Press. p. 17.

You can lie through your teeth and fool the kids, but Mussolini was a member of the Italian Socialist Party and rose to power on the backs of the “shirtless ones” (the unemployed who marched on Rome) just as Hitler was the leader of the National Socialist German Workers Party.

John, Mussolini WAS a member of the Italian socialist party. Hayek was a socialist before he met Mises. So what? Does that make The Road to Serfdom a socialist book?!

And do you realize the claim that Mussolini pursued laissez faire policies at first is coming from *Sheldon Richman*, the editor of _The Freeman_, a top libertrian magazine? So you are really accusing *Sheldon* of lying through his teeth about this? But why would Sheldon want to associate Mussolini with laissez faire, a policy he endorses, except that Sheldon writes the truth, and not what he wants the truth to be?

“So what?”
So I’m past bored with those who insist that everything evil was the work of right-wingers (e.g. “Stalin was not a true Socialist”); I am waiting (with no enthusiasm) for a best-seller depicting Pol Pot as a right-wing Christian fundamentalist.
Mussolini was a socialist – if, for a short period he adopted sensible economic policies and Von Mises complimented him on those policies while maintaining his horror of Mussolini’s foreign policy, that does not make Von Mises an apologist for Hitler’s war crimes. The self-styled “Lord Keynes” seeks to blame Von Mises for Hitler’s war crimes by selectively quoting out of context part of a piece in which Von Mises argues against Mussolini’s use of force in foreign policy. As I said, he can lie through his teeth but it won’t fool me.
I know that I have boringly repeated myself – tough. He’s been repeating his lies.
I recognise that there have been evil right-wingers, but simple observation shows that the vast majority of dictators are left-wingers and the evil committed by left-wing dictators is far greater than that committed by right-wing dictators.
I didn’t join this blog to argue about the relative evils of the left or the right, just to correct a blazingly stupid error by UnlearningEcon and I find myself expected to swallow all sorts of nonsense.

I’m the sort of guy who looks at facts, rather than just the latest blog on the internet.
FYI Fascism was not the same as socialism but they had a lot in common:Mussolini was expelled from the Italian Socialist party for his support for Italian participation in the First World War hoping to win territory from Austro-Hungary and destroy the Habsburg and Hohenziollern dynastys, not because he had adopted any capitalist doctrines

“Lord Keynes” is trying to deny that that he seeks to blame von Mises for Hitler’s war crimes. He is either dishonest or stupid.
“we need look no further than Ludwig von Mises for sickening apologetics for Mussolini’s fascism:”
“Mises became an economic adviser to the Austrian fascist Engelbert Dollfuss”,
“Austro-fascism party of the Dollfuss and Schuschnigg regime in Austria – which Mises supported and even advised!”
“fascism and its history of war crimes”
“Mises isn’t just talking about Italian fascism here: he is certainly thinking of fascism as a general movement.”

Advocating laissez faire while praising fascism is no more possible than advocating inter racial harmony while attending a KKK-meeting. You do one or the other. Likewise, if you enact laissez faire policies, strengthen private property rights and reduce the scope of the state, you are not enacting fascist policies.

Let me get this straight: August Pinochet implemented a Chicago school neoclassical version of laissez faire, but couldn’t have been a right wing dictator?

Mises advocated laissez faire, but couldn’t have advised and supported the Austro-fascist Dollfuss?

Yet Mises did:

“Engelbert Dollfuss, the Austrian Chancellor who tried to prevent the Nazis from taking over Austria. During this period Mises was chief economist for the Austrian Chamber of Commerce. Before Dollfuss was murdered for his politics, Mises was one of his closest advisers.”
Hans-Hermann Hoppe, “The Meaning of the Mises Papers,” Mises.org, April 1997http://mises.org/freemarket_detail.aspx?control=137

“Mises later said that it was the growing power of the Nazi party in Austria that prompted him to leave the country. With this remark, he did not refer to the government of Engelbert Dollfuss, which had reintroduced authoritarian corporatism into Austrian politics to resist the socialism of both the Marxist and the Nazi variety. Mises meant the Austrian branch of the National Socialist German Workers Party, which enjoyed strong backing from Berlin and fought a daily battle to conquer the streets of Vienna. Dollfuss’s authoritarian policies were in his view only a quick fix to safeguard Austria’s independence—unsuitable in the long run, especially if the general political mentality did not change” (Hülsmann 2007: 683–684).

“In tackling the economic crisis the Dollfuss-Schuschnigg dictatorship pursued harsh deflationary policies designed to balance the budget and stabilize the currency. The government’s program featured severe spending cuts, high interest rates, and frozen wages. …:”

Bukey, Evan Burr. 2000. Hitler’s Austria: Popular Sentiment in the Nazi Era, 1938-1945, University of North Carolina Press. p. 17.

(1) You are indeed a fair minded man. That is why I enjoy reading your blog

(2) in that spirit, looking over my remarks above, I was wrong in failing to note your idiomatic English expression “everyone was doing it”. You did call it a “mistake”. I did not read that part of your comment properly. I was wrong and happily withdraw my comment about you, with apologies for error.

Wasn’t it you who criticized me on the false assumption that I thought debating was about winning?

The free market is a very objective concept. It is incredibly easily defined. Most so called free market advocates are anything but, most of them are akin to “I’m not a racist, but I hate blacks”. In politics, for instance, very few but Ron Paul is a true free market advocate and even he is rather moderate. In economics, free market advocates are almost exclusively Austrians. In the media, I can’t think of any TV-network other than RT that to some extent at least is geared towards the free market.

You are not a free market advocate if you support the Fed. You’re not a free market advocate if you support sanctions on other countries. You’re not a free market advocate if you support bailouts and corporate welfare of any kind. You’re not a free market advocate if you support mandated benefits for employees and special protection for unions. You are not a supporter of the free market if you favor various government regulations on the economy.

Very few don’t land in one or several of those categories, to name just a few deal breakers. In fact, very even have the most basic understanding of what a free market actually means, much less how it works.

You seem to be completely lost on the market-democracy analogy. And by the way, those with the most money tend to be those who use resources the most effectively, that is what made them so rich to begin with. For instance, Steve Jobs utilized scarce resources very effectively all through his life, more effectively than perhaps anyone else the past 100 years. So your assumption is, as usual, completely groundless.

I didn’t say that, actually – I said it wasn’t about ‘owning’ people and ‘making them look stupid’. Regardless, though, you are the one who initially declared that I had ‘forfeited the debate’, so I did not bring it up.

Ron Paul, afaik, is a minarchist rather than an anarcho-capitalist, so that you appeal to him as something of a ‘free market’ advocate shows how subjective the term can be.

You appear to use ‘free market’ to mean ‘no state whatsoever’, but historically this hasn’t necessarily meant markets and trade, so I feel the term is a misnomer.

You can say I’m ‘lost’ but if you don’t back it up that suggests you are lost. If some people have more votes than others in what is produced then production will be more geared towards their preferences.

And your conjectures about the rich ‘deserving’ is standard ‘just-world effect’ reasoning, with no proof. Anecdotal evidence is also useless.

Yes, as I said, Ron Paul is a moderate. But he does favor zero taxation and market regulations and is against bailouts, subsidies, tariffs and other forms of protectionism, the Fed etc. He is a supporter of the free market because he wants government out of the way, all the way.

I don’t know how many times you’ve rehashed the market-democracy analogy, but for whatever reason, you seem to think therein lies some sort of contradiction or flaw. As I’ve tried to explain, it shouldn’t be taken too literally. Dollar-votes are voluntary, you can’t vote yourself power over others with the money you have. You vote by giving other peole your money. There is no coercion involved. That is the whole point and nothing else. The contrast is against the inherent violence and private property violations of political democracy. It isn’t en economics analogy, it is a philosophical one and it this fact that seems lost on you.

It is not all given that the production will be skewed towards what the people with most votes have. For one reason, who has how many votes changes over time, sometimes quickly. If a billionaire invests his wealth in the production of something nobody wants, he’ll find himself without votes pretty soon. Production, especially on a free market (or even relatively free) will always be geared towards consumer demand, whatever it may be. In other words, you’re putting the cart before the horse.

I didn’t say anything about deserving, but again, on a free market, people who serve the needs and demands of other people well tend to become rich. This means they’ve used resources effectively. That is a matter of economic law. In a state controlled environment, which you seem to favor based your obvious animosity towards free markets, there are of course other ways of getting rich. Looting through the political process being one.

As for backing things up, I’ve backed everything up with arguements and evidence, so you can drop the act.

I’m pretty sure Ron Paul is a minarchist rather than an anarcho-capitalist, so I’m not sure how he could support zero taxation. If he is a minarchist then he can’t fall into your definition of a free marketeer.

Production, especially on a free market (or even relatively free) will always be geared towards consumer demand, whatever it may be.

Correct, and demand is measured in money. Hence, production will be geared towards the demand of those with more money.

I didn’t say anything about deserving, but again, on a free market, people who serve the needs and demands of other people well tend to become rich. This means they’ve used resources effectively. That is a matter of economic law.

Unsupported assertion, just world reasoning. Look up the just world effect.

I can’t recall saying that Ron Paul is an anarcho-capitalist. He obviously isn’t. He is a minarchist, a classical liberal in Ludwig von Mises tradition. But he is still a free market advocate. And he does support zero taxation. He wants to abolish the IRS along with the Fed and a great many other government institutions. You don’t need to be a full blown anarcho-capitalist to be a free marketeer, as I’ve explained before.

You seem to have a rather strange idea of who has money. Who has more money, the one guy with one million or a million guys with 1000? Even Bill Gates and Warren Buffets are scarcely more than blips on the screen in an economy of 300 million people, or well over 6 billion if you count the entire world. No single person or group of persons can control the production in a free market. It takes government to do that.

How is my observation of the rich unsupported? Look at almost any successful entrepreneur in history. Look at Rockefeller, Carnegie, Vanderbilt, James J. Hill to name but a few. What of the fact that the richest people tend to be founders of successful corporations, like Jobs, Ellison, Bryn, Zuckerburg etc. Or any of the tens of thousands of partners in law firms, financial advisors, consultancy firms etc. They got rich by serving the needs of their customers. Just how seriously in denial are you?

So Ron Paul can be a free marketeer, despite not adhering to your earlier definition of it (which seemed to mean no state), but others can’t redefine the term? Thanks for demonstrating my point about the free market so succinctly.

You are aware that the rich (top 1%) have a significant portion of income – over 20% – and over 40% of wealth, right? Just because everybody else put together has ‘more’ it doesn’t mean that production won’t be somewhat skewed by this fact.

More anecdotal evidence with a great sprinkling of the availability heuristic, and of course the just world effect. It’s funny how when you want to decry bailouts and the financial sector, you cite them as unjust, yet when you want to appeal to the ‘hard working rich’ you include law & financial firms. More evidence of the shape-shifting free market.